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Ernst & Young Luxembourg's technical guide entitled Investment Funds in Luxembourg provides an introduction to Luxembourg as a centre for investment funds, the types of funds available and a summary of the regulations applicable to the formation and operation of funds. It also covers the regulations applicable to management companies based in Luxembourg.

The 220 page guide is organized as follows:

This chapter introduces Luxembourg’s investment fund industry and outlines Luxembourg’s solutions for investment funds (UCIs).

This chapter outlines current and future developments in Luxembourg and the EU.

This chapter provides an overview of legislation applicable to investment funds, outlines the choices of structure, and the key characteristics of funds under each of two fund laws – the 2002 Law (the principal law) and the SIF Law (relating to informed investor funds) - and includes an explanation of the concept of co-management or pooling of assets. It also outlines the conditions which need to be met for an investment fund to fall under the 2002 Law or the SIF Law.

This chapter summarizes investment and borrowing rules for investment funds under the 2002 Law, covering the regulation for both Part I and Part II UCIs.
It also outlines the rules for specialized UCIs which include hedge funds, venture capital funds, futures contracts and options funds and real estate funds. These may be set up under the SIF Law or under Part II of the 2002 Law.
The chapter also provides an overview of valuation requirements and guidelines.

This chapter describes the procedures to be followed when setting up an investment fund in Luxembourg and the roles of the various service providers. It provides details of the content to be included in the prospectus (for all 2002 Law funds) and simplified prospectus (for UCITS funds). Ongoing supervisory requirements for funds are outlined. The chapter also sets out requirements and considerations for conversion of funds from the 2002 Law to the SIF Law and vice versa, the fast track authorization procedure for the creation of a side pocket and the cases where a fund may be liquidated or liquidation is required.

This chapter outlines the roles and responsibilities of the Luxembourg central administration and the detailed rules relating to  the accounting records, calculation of the NAV and supporting documentation, the issue and repurchase of shares or units, the register of shareholders, the preparation of documents intended for investors, and their dispatch to shareholders.
In addition, this chapter provides a brief summary of the main CSSF relating to money laundering and terrorist financing and prevention of the use of the financial sector for the purpose of money laundering and terrorist financing.

This chapter outlines minimum capital requirements, and covers the issue and repurchase of shares, the payment of dividends, and protection against late trading and market timing practices.

This chapter covers the roles and responsibilities of the Luxembourg custodian, in the context of both the 2002 Law and the SIF Law.

This chapter details:
• The annual and semi-annual reporting requirements
• Information to be sent to the central agency responsible for the collection of such information (Finesti), including monthly, quarterly and annual financial information as well as prospectuses
• Audit requirements

This chapter covers the treatment of NAV computation errors and compensation of losses arising from non-compliance with investment restrictions.

This chapter covers registration duty, annual subscription tax, the taxation of directors’ fees, withholding taxes on dividends and revenues, taxation on dissolution and the application of the EU Savings Directive.

This chapter outlines the taxable status of Luxembourg UCIs and their service providers (in particular management companies and advisory companies), and the VAT regime applicable to services provided to such Luxembourg UCIs and their service providers.

This chapter lists the types of formation expenses and annual running expenses of Luxembourg UCIs.

This chapter outlines a summary of some of the key conditions for listing the shares or units of UCIs on the Luxembourg Stock Exchange (Bourse de Luxembourg).

This Chapter outlines the requirements and procedures for marketing the shares of a Luxembourg UCITS in other EU Member States, the requirements for marketing the shares of a UCITS situated in another EU Member State in Luxembourg and Luxembourg marketing regulations.

This chapter summarizes the rules applicable to management companies and also covers the taxation of management companies.

Appendix I - Understanding UCIs
This appendix describes what UCIs are, and explains the various types of fund and asset classes.

Appendix II - Summary of current primary regulations
This Appendix lists the principal regulations and rules applicable to Luxembourg investment funds.

Appendix III – Withholding tax rates applicable to Luxembourg UCIs
This Appendix provides information on the withholding tax rates applicable to the different types of income received by Luxembourg UCIs.

Appendix IV – Glossary

Appendix V – Ernst & Young Luxembourg asset management related publications

Appendix VI – Ernst & Young investment fund services

Posted on 21 September 2009